So they just had to go find a broker to do their deals .. not the end of the world however like I said every state is different in their position of what constitutes a commercial loan..

Keep good records of all expenses, on receipts I like to see notes on them saying, "Paid initial contributions" so later you know what receipts constituted your initial expense entries.

You comments constitute defamation.

Having a tenant constitutes "doing business" in Texas. 

The smaller efficiency has a compact kitchen (attaching picture below) Not sure if that will constitute as a kitchen.Compact KitchenWould this effect my appraisal in an adverse way?

Not at all fair, nor constitutional IMHO, but possible non the less.If I in were in your situation, I would ask her to not let him move back in, inform her it's in violation of the lease, and jeopordizes (sp) her Section 8 voucher, and thus the roof over her kids head.

If the amount is sufficient to constitute a down payment (with some reserves) in California, I would strongly consider replicating you late relative's strategy and buying nearby.  

what constitutes debt replacement?  

I agree, 1 roach does not constitute an infestation and it could just be coming in do to the weather.  

I just spoke with my mortgage broker who mentioned he didn't think I would be able to do delayed financing since this constitutes as a gift from my dad.